UAE and Saudi Arabia to Introduce Sugar-Based Drink Taxes in 2026: Will the Rest of the Gulf Follow?

UAE, 18 October, 2025: The UAE and Saudi Arabia are set to roll out new sugar-based beverage taxes in 2026, marking a regional shift toward linking fiscal policy with public health goals. The move replaces the current flat excise tax with a tiered system that taxes drinks based on sugar content per 100 millilitres  the higher the sugar, the higher the tax.

Saudi Arabia, which first introduced a 50% excise on sweetened drinks in 2017, will adopt the volumetric model next year. The UAE will follow suit, aligning with international examples like the UK, Mexico, and Singapore.

Analysts say the reform aims to curb rising obesity and diabetes rates while helping governments diversify revenues away from oil. “Other GCC countries are likely to follow this trend as healthcare costs rise and fiscal pressures increase,” said Samer Hasn, Senior Market Analyst at XS.com.

The new structure is expected to reshape the beverage industry, pushing producers to reformulate products, cut sugar levels, and expand low- or no-sugar alternatives. Competition is likely to intensify as brands adapt to a growing health-conscious market.

For policymakers, the measure supports economic diversification and fiscal sustainability by reducing healthcare spending and promoting healthier consumer choices. With the UAE and Saudi Arabia leading the charge, Bahrain, Oman, and Kuwait may soon consider similar steps turning sugar taxes into a regional policy trend that’s as much about health as it is about economic resilience.